FARM IMPLEMENT MACHINERY CO., PETITIONER, VS. THE COMMISSIONER OF CUSTOMS, RESPONDENT.

On July 9, 1954, 833 cases of merchandise arrived at the Port of
Manila on board the “S.S. Vigan”. The Farm Implement Machinery Company,
importer of the above merchandise, presented a “Release Certificate”
issued by the Central Bank, purporting to show that the importation
consisted of “Semolina” falling under Commodity Code No. 040802-NEC of
the Statistical Classification of Commodities of the Central Bank.
Examination of the 833 cases conducted by appraisers of the Bureau of
Customs, disclosed that the importation consisted of “Macaroni” and
“Spaghetti” falling under a different classification (Commodity Code
No. 04080-UI). The goods were declared liable to seizure, it having
been imported in violation of law (Central Bank Circular No. 44, in
relation to Sec. 1363 (f), of the Rev. Adm. Code), or for not having
been covered with proper certificate cf importation. Seizure and
forfeiture proceedings were accordingly instituted. Before hearing
thereof, the 833 cases were released to the importer, upon the filing
of a surety bond in the amount of P6,777.00. After hearing, the
Collector of Customs of Manila, on July 25, 1955, rendered judgment
ordering the forfeiture of the 833 cases of “Macaroni” and “Spaghetti”,
or the surety bond filed in substitution thereof, on the ground that
the Central Bank release certificate, purporting to cover said
importation, does not correspond to the true nature of the goods
imported. This decision of the Collector was affirmed by the
Commissioner of Customs who, in turn, was sustained by the Court of Tax
Appeals, in a decision rendered on April 1, 1957, the pertinent
portions of which reads—

“The only issue in this case relates to the proper classification of the article in question.

Petitioner was granted a foreign exchange allocation by the Central
Bank for the importation of “semolina” included within Commodity Code
No. 040802-NEC of the Statistical Classification of Commodities, which
embraces:

‘Groats,
semolina and cereals; flaked, pearled or prepared in a manner not
elsewhere specified (including prepared breakfast foods).’

Upon
examination by customs authorities of the articles imported by
petitioner, the former classified the articles as macaroni and
spaghetti under Commodity Code No. 04Q804-UI, covering:

‘Macaroni, spaghetti, noodles, vermicelli and similar preparation.’

An analysis of samples of the subject importation made by Mr.
Florencio Soliven, Head of the Department of Food Technology of the
Institute of Science and Technology, disclosed that—

Sample A is Semolina Macaroni while Sample A-1Semolina Spaghetti. Both are made of Semplina and are American and
European cereal food preparation. (Exh. ‘A-1′, p. 42, Customs Records).’

The
petitioner contends that the report of analysis of Mr. Soliven
conclusively shows that the subject shipment consists of ‘semolina’.
Whether an article is classified as Semolina Macaroni, or Semolina
Spaghetti, or simply Semolina does not alter the fact that the article
is semolina. Thus, it argues that the importation was properly
classified under Code No. 040802-NEC, and, therefore, should not have
been forfeited.

The respondent, on the other hand, maintains
that the articles in question are ‘macaroni’ and ‘spaghetti’ and,
therefore, fall under Commodity Code No. 040804-UI of the Statistical
Classification of Commodities, which is a more specific classification.

A
cursory reading of the aforesaid classifications shows that for
‘semolina’ to fall under Code No. 040802-NEC, it should be ‘flaked,
pearl or prepared in a manner not .elsewhere specified’. While the
macaroni and spaghetti in question are made of semolina, yet they
cannot justifiably be classified under the commodity code number
authorized by Central Bank Release Certificate Ref. No. 15480. They are
not flaked, or pearled or prepared in a manner not elsewhere specified.
On the contrary, they are- prepared as macaroni and spaghetti of
Commodity Code No. 040804-UI of the Statistical Classification of
Commodities.

Finding the articles subject of the present
seizure, proceedings as falling squarely under Commodity Code No.
040804-UI, the said articles were brought into the;’ Philippines in
contravention of the foreign, exchange license granted for the same,
and as such were imported contrary, to law. We are, therefore, of the
opinion and so hold that the said articles were properly forfeited
under Sec. 1363 (f) of the Revised Administrative Code, in relation to
Central Bank Circular No. 44.

WHEREFORE, the decision of
respondent is hereby affirmed. We decree the forfeiture of Surety Bond
No. C-54/7708 of the South Sea Surety & Insurance Co., Inc. in the
amount of P6,677.00 which was filed for the release of the importation
in question, with oosts against petitioner.”

A reversal of the above judgment is urged on three (3) counts, all
of which converged on the singular issue of the proper classification
of the importation in question.

There is no dispute as to the fact that the appellant was granted a
foreign exchange allocation by the Central Bank to import “semolina”
falling under Commodity Code No. 040802-NEC of the Statistical
Classification of 0ommodities. The importation which was made under the
authority of the license (for semolina) was found, when examined, to be
semolina “macaroni” and semolina “spaghetti”. Commodity Code No.
040802-NEC states “groats, semolina and cereals; flaked, pearled or prepared in a manner not elsewhere specified. While the Macaroni and Spaghetti, which were contained in the 833 cases are made of semolina,
its conversion into another form and condition of food preparation has
taken it away from the classification and placed it directly under
Commodity Code No. 040804-UI. A description of the articles will point
more clearly the distinctions. Webster’s International Dictionary gives
the following:—

“Semolina—the purified middlings of durum or other hard wheat, used for macaroni and similar edible pastes; sezings or course middlings;

“Macaroni—kind of paste, composed chiefly of wheat flour, dried in the form of slender tubes;

“Spaghetti—A
variety of alimentary, paste made in cords of small diameter but larger
than vermicelli and solid (not tubular as in macaroni).”

It thus becomes manifest that semolina in its original form
and condition, falls under Commodity Code No. 640802-NEC, and once it
is converted into another form, and condition, it loses its
classification as semolina and comes under the purview of any other preparation. In the instant case, it was converted or transformed into macaroni and spaghetti,
and fall under Commodity Code No. 040804-UI. There is, therefore,
variance between the release certificate given by the Central Bank,
pursuant to appellant’s foreign exchange allocation and the goods it
had imported.

The insinuation that the issuance of Central Bank Circular No. 44,
is improper, is untenable, as it is without merit. The authority of the
CB to pass such circular has been sustained in a number of cases.^[1]
It is, contended further that even if the importation is in violation
of Circular No. 44, still the subject-matter is not liable to seizure
and forfeiture, because said circular does not provide penalty for
violation thereof. True, there may be no penalty prescribed by Circular
No. 44. The goods are, however, being forfeited, pursuant to Circular
No. 44, in relation to Section 1363 (f) of the Administrative Code.
Circular No. 44, among others, provides that “No item of import shall
be released by the Bureau of Customs without the presentation of a
release certificate issued by the Central Bank or any authorized Agent
Bank in a form prescribed by the Monetary Board”. There is no valid
release certificate issued for the importation at bar. What was issued
was a release certificate for “semolina” under Commodity Code
No. 040802-NEC and not for Macaroni or Spaghetti, under Commodity Code
No. 040804-UI. This being the case, the goods actually imported are of
prohibited category and liable to forfeiture, as having been imported
contrary to law, in accordance with the provisions of the
Administrative Code which states: “Vessels, cargo, merchandise, and
other objects and things, shall, under the condition hereinbelow
specified, be subject to forfeiture; * * *

Any merchandise of prohibited importation or exportation, the
importation or exportation c-f which is effected or attempted contrary
to law, * * *”. (Sec. 1363 [f]). The law violated here, is CB Circular
No. 44, in relation to the grant of license to import semolina, and the
penalty is provided for by the above-cited provision of the
Administrative Code.

Wherefore, the decision appealed from is hereby affirmed, with
costs, in both instances, against the appellant Farm Implement
Machinery Company.

Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Dizon, JJ., concur.

^[1] Commissioner of Coustoms vs. Nepomuceno, G. R. No. L-11126, March 31, 1962, and cases cited therein.